How do you think credit card transactions work? The auth code you get back from a "valid" cc transaction doesn't represent a transfer of money. That might not happen for another 24 hours.
Doesn't reserve funds, it's rarely realtime. "Guarantees payment" just means that the cost has been shifted from the retailer to the card provider - for a while anyway, then the card provider starts grabbing money back.
Yeah it does reserve the funds, I've worked in this industry. Settlement happens later, but authorisation does put a reserve on the funds in the credit account if the transaction has gone end-to-end.
If you mean the 'chargeback' feature when you say "then the card provider starts grabbing money back", then yes, absolutely, this is a feature of card payments and is essential for people to have any trust in internet commerce at all. Chargeback is good
End to end is the key point, loads of places still use off line terminals that batch the job up at eod.
I wasn't referring to chargeback; I meant stroppy card providers. The sort of thing these guy are fighting (although that was for a security breach rather than too many authorised charges against empty accounts):
